Northern Star (ASX:NST) Delivered a 49% Profit Surge- Is It Still a Buy at These Levels?

Northern Star profit surges on gold – buy now or wait?

Northern Star Resources (ASX: NST) just posted its best half-year result in the company’s history, with underlying profits jumping 49% and EBITDA hitting a record A$1.876 billion. With gold sitting around US$5,000 per ounce, the earnings power on display is remarkable. But here’s the thing: the stock barely moved after the announcement, and that tells you something. The market is not doubting that this was a strong half-year result. It is simply asking whether this is the best the company can do and whether profits can grow further from here.

What are the Best ASX Gold Stocks to invest in right now?

Check our buy/sell tips

Northern Star Rides the Gold Supercycle With Record Margins and Cash Generation

The standout feature isn’t the profit number itself; it’s how Northern Star got there. The company’s EBITDA margin expanded to 55%, with Kalgoorlie operations leading at 63%. For every dollar of gold sold, more than half dropped straight to the bottom line.

But this was almost entirely a gold price story, not a production growth story. Northern Star actually sold fewer ounces than last year, 729,000 compared to 804,000, due to lower grades and operational hiccups at Jundee. The gold price did the heavy lifting, not volume growth.

On an AISC basis, the margin between what Northern Star realised per ounce and what it cost to produce is currently around A$1,900 to A$2,000, far wider than peers like Evolution Mining and Regis Resources. That’s excellent, but it only holds up if gold stays near these levels.

Strong Balance Sheet, But Production Guidance Tells a Different Story

Northern Star Resources still has a strong balance sheet. It ended the half with A$293 million in net cash and A$2.7 billion in total liquidity. The board kept the interim dividend unchanged at 25 cents per share, fully franked. This shows caution rather than excitement, even though profits are at record levels.

The bigger issue is future production. Management has cut its full-year gold sales guidance to 1.6-1.7 million ounces, down from the earlier 1.7-1.85 million ounces, while cost guidance has moved higher. This does not look like a business growing production right now. Instead, it is benefiting from high gold prices while spending heavily on projects that will pay off later.

That spending is focused on something important. The KCGM mill expansion is now 86% complete and expected to be up and running in early FY27. Once finished, it should more than double the processing capacity. This project is the key reason Northern Star could move from relying on gold prices to delivering real production growth.

The Investor’s Takeaway

At around A$28 per share, Northern Star trades on a trailing P/E of roughly 25 times. For a gold miner, that’s not cheap; the market is already assuming gold prices stay strong from here.

In our view, it really depends on how long you plan to hold the stock. Long-term investors can look to the KCGM expansion and the Hemi development pipeline as future growth drivers that could justify today’s valuation once production lifts. Income-focused investors also get a modest but steady fully franked yield of around 2%. However, for new buyers, the price leaves little room for error. If gold prices fall back toward A$4,000 per ounce, earnings would weaken quickly.

The main risk is how sensitive profits are to the gold price. The main upside trigger is real production growth from KCGM in FY27. If you are comfortable owning a high-quality miner at peak-cycle earnings with a clear growth path ahead, Northern Star makes sense. If you prefer a bigger margin of safety, waiting may prove the better option.